I am just listening to the consensus among people who know the economy best. And what they will say is that if you either increase taxes or significantly lowered spending when the economy remains somewhat fragile, that that would have a de-stimulative effect and potentially you’d see a lot of folks losing business, more folks potentially losing jobs. That would be a mistake when the economy has not fully taken off.

How much of a President's work is done by just listening to the consensus among people who supposedly know something best? What's the alternative? Well, knowing stuff. But how much can one person know? He must defer to the experts, and presumably he's chosen the best experts, or, more accurately, he's chosen experts at choosing experts or experts at choosing experts at choosing experts at choosing experts. And then he can defer. Especially when these experts achieve consensus.

And yet, if he had his experts and they reached consensus, what has changed now? You could say: He's closer to the election, but why would that affect the experts...

.... if the experts are the experts who will serve?

... then I'm sure to get a brain... a heart... the nerve...

The experts who are serving now are different experts, with different expertise. Bring in the new team of experts. And watch them achieve consensus: Tax the rich!

169 comments:

I'm kind of surprised they actually want to tax the rich. How can you then demonize them? And worse, once you raise the rates and the revenue stream you promised that would materializes....doesn't? Then what? And even worse, what if the rich stop producing past a certain point? Or move their investments to avoid the higher capital gains tax? What if everything other than the percentage of tax collected DOESN'T remain static? Now what?

the top 10 percent of income earners paid 70 percent of all federal income taxes in 2008, while the bottom 50 percent paid only 3 percent. Remarkably, 49 percent of U.S. households paid no federal income tax at all.

Speaking of consensus, and going back to my second post of the day about how much we Americans really do agree with each other, nearly all of us say taxation should be progressive. The only issue is the steepness of the progressivity.

Yes, even the flat tax people. Check it out. They've got some progressivity in their proposals. There's a mainstream consensus and we're only arguing about the degree of progressivity, pretending we're farther apart than we are.

President Truman was actually willing to admit that there were smarter men than he, which is why he relied on them to help him form public policy.

Obama, by contrast, is The Avatar of the Second Coming of Jesus Christ, as well as The Smartest President Everrr. So why is he fishing around for a consensus on economic policy? Perhaps he doesn't know what he's talking about? I find that shocking.

There's a mainstream consensus and we're only arguing about the degree of progressivity, pretending we're farther apart than we are.

When 1 party runs around the country willfully and purposefully lying that "the rich" aren't paying "their fare share" - when in fact the rich are the only people paying taxes - I'd say we are very, very far apart.

That's why elections matter. Romney is a RINO, conceded. But of the people he brings in with him, a large fraction of them will not be.

Suppose Obama had lived up to all his hype of being a cool, cerebral pragmatist. But he has a D after his name, so of the people he brought in with him, a large fraction would not be, but would be ideologues.

I for one am opposed to rule by the consensus of appointed experts, even if they do a fantastic job. And as I get older I am getting opposed to elections. I'm starting to think that public service, at any rate Congress, should be done by people appointed by lot, like jury duty. The Republic of Venice had a 1500 year run under that sort of system. I think we'd have a lot less crony capitalism, and a lot less government, and a lot less substitution of legislation by appointed officials who make regulations.

For Warren Buffet raising his taxes isn't going to affect his standard of living one iota. What Obama doesn't want to understand is the "rich" he wants to tax are mostly the pre-presidential couple of Barry and Michele Obama rich. Now if only he remembered that with a mortgage, private schooling, car leases and insurance, big property taxes and state and local income taxes and other fixed expenses, you have a problem when your income doesn't rise but your taxes do. Can't stop paying the taxes, the mortgages, the student loans, the kids education, the leases and insurance. So what do you cut back on? Savings, less investment funds for the economy. Luxuries and entertainment. Working people work for the providers of these things. Gets who gets laid off.

A great deal. Not slide rule knowledge. Knowledge of human nature: what motivates people in the economic realm; what discourages people in the economic realm. And therefore what broad policies will work, what broad policies won't. The details? There's an army of technocrats to work through the details.

Obama knows but one thing: how to push the resentment button. That ain't Chief Executive Ronald Reagan level knowledge. That's not much knowledge at all, except for destroying: Obama's MO.

Mitt Romney would be wise to go in the tank now, and avoid taking up residence in the White House come January. Listen to David Stockman opining over the weekend... we are fooked, and it won't really matter who pretends to be in charge. The Gods of the Copybook Headings are coming for the debt economy.

So, this is an interesting question: If we know spending generates jobs, and cuts lead to job loss, how to we justify our tax and spending proposals?

Essentially, both sides of the aisle have the same solution which is to grow the economy. The democrats propose the growth through government spending (more direct) and republicans through cuts in taxation (indirect).

This leads to an interesting problem for republicans - if taxes are progressive (and the mitt romney tax loopholes aside) they are - using tax cuts will most likely be regressive stimulus: Giving people that have the most, more.

Democrats get a different problem entirely: They appear to be totally incapable of balancing their budget and just spending wildly. Make no mistake that both parties are spending, but as mentioned the democrats version is direct.

So, let's circle back: Why do the dems purpose this tax on the rich when they know that raising a tax burden can have a negative effect on the economy? (in the same way a spending cut would?)

Look at their problem - balancing the budget. They want to appear to be fiscally responsible while making this direct spending plans (like the stimulus). "Look, we are finding ways to pay for it". The numbers show that this would NEVER be able to cover the cost of the stimulus - but the real goal of the stimulus is to create jobs and therefore increase tax revenue (grow our way out). This is the same method that republicans purpose in paying for tax cuts.

The democrats can hold up the Mitt Romney's and their 'clever' use of the tax code (the 2 and 20s aka deferred interest) to show that the Rich aren't paying their fair share. This leads to the AMT and the AMT v2 (Buffet Rule).

The republicans will point to the small business owners and other people already feeling a signifcant tax burden at the top tier of income.

So - what's the better solution? One: Admit that our plan, in both parties, involves short term debt/deficit INCREASES in the hopes of long term growth.

Two: Close tax loopholes that are being exploited by the super rich, like the 2 and 20 and other international exploits.

Just my two cents. Sorry for the wall-o-text.

Tldr version: Cut loopholes, leave the tax rate where it is. Stop playing games with the rate while ignoring the base.

Berkshire Hathaway, the eighth-largest public company in the world according to Forbes, openly admits to still owing taxes for years 2002 through 2004 and 2005 through 2009, according to the New York Post. The company says it expects to "resolve all adjustments proposed by the US Internal Revenue Service" within the next year.

Hmmmm...we must be getting close to another one of those "RAISE THE DEBT CEILING NOW OR WE'RE SCREWED!" deadlines. Dems will whine "well, we wouldn't have to do this if you raised taxes like we asked!".

Instead of budgets, we get this kind of posturing followed by a self-approved credit limit increase. Our government is a sick, sick junkie.

Maybe Roberts was right. We get the govt. we deserve. And if you want to play around with socialism? Roberts has got your socialism right here, pal. Suck. On. That.

Raising taxes now is not a good idea if the goal is to improve the economy. But that's not the goal at this point in the election cycle. The goal is to strengthen appeal to Obama's economically illiterate voter base.

Obama's lamely trying to claim that allowing the tax rates to rise only on the 'wealthiest' won't hurt the economy. It's just more of his crass, class warfare, and he's hoping there are lots of stupid voters out there who will believe it.

Jay said...In 2009, the top 1% of tax returns paid 36.7% of all federal individual income taxes. That is more than the bottom 50% who pay 2%.

The share of taxes paid by the top 1% has increased from 18.4% in 1979 to 38.7% percent in 2009.

=====================That is what happens when wealth concentrates in the hands of a few.They pay more taxes because they have grabbed more of the nations wealth.Most Americans would love to be a billionaire, then multibillionaire then "burdened" with paying yet more taxes as the alternative is to be poor, jobless, or part of the shrinking middle class that has seen wages stagnant since the 1980s.

In Paraguay, in the 1950s, 300 Paraguyan families owned 88% of the disposable wealth in a land of millions and payed 73% of the taxes.Yes, the burden of all those government progams fell on those Noble Few Paraguayan 300....who besides business, were the main source of generals and government ministers. They further heroically served the masses - since it was THEIR taxes the 300 families made that helped out the lowly peasants.

Taxing the rich will pay for 8 days of Obama's big government spending.Nevermind the fact that more jobs will be lost. Obama has that covered by killing off welfare reform. The plan there is to give democrats a claim, as people shift onto welfare, that the employment number is down. Even though it's up.

The real problem with taxes is that too few Americans pay them. For moral as well as practical reasons, everyone should pay something. I'm cool with progressive taxation, but it should include us all. Everyone, no matter how poor, can afford to pay something. That would make taxation less of a stimulus killer, and make it's supply much more stable and dependable.

Nobody's income varies as much as the rich from boom to bust. In a downturn, it's the rich who have the biggest drop in income, so if you depend on them for revenue, you get an unusually big drop at the worst possible time. California's fiscal problems are a good demonstration of this, and everybody out here knows it now, but they can't do anything about it. So now the rest of you out there will be bailing us out, because when it comes to states, CA IS too big to fail.

@ Jay - As for the credit rating reduction - look at the last year? I'd be shocked to find a source that would say that the threat of default, because of the debt ceiling debate, wasn't the cause of the reduction.

As for the cuts in spending leading to cuts in growth, I'd make the same challenge. If it is NOT the assumption that most economists make, I'd be very curious. (Talking short term, as I referenced)

Why is Obama raising money abroad, including $30,000 a plate dinners in Switzerland? You don't want to ship American jobs overseas? How about not shifting American government overseas? Who is buying your government, Mr. Obama, and what are you selling to them?

Dose of Sanity said... @ Jay - As for the credit rating reduction - look at the last year? I'd be shocked to find a source that would say that the threat of default, because of the debt ceiling debate, wasn't the cause of the reduction.

Of course you would. Note (To avoid a downgrade, S&P said the United States needed to not only raise the debt ceiling, but also develop a "credible" plan to tackle the nation's long-term debt. )

Too much talk about spending and not enough talk about spending cuts. Leave the money in the economy to begin with. Taking it out of the economy, sending it to DC, and then getting, what--70% of it back in ways that you cannot control...that has to stop.

I'm sick to death of paying taxes only to see it spent on law enforcement, education, and enormous bloated regulatory agencies.

I'm voting for Romney because he is most likely to be influenced by the Tea Party.

We could raise the ceiling all we want, but it's the level of debt that's the problem. We could raise it to double what our debt is if we wanted to. It wouldn't make us more solvent or more safe.

Totally and absolutely agree. I was just responding to an earlier post about the debt ceiling debate being "manufactured". It's really a debate over "do we pay our debt?". If we press so hard for no, like last time - the people who are expecting to get paid get nervous. That's what resulted in a credit rating reduction for us last time.

The systemic debt problems aren't AT ALL effected by the debt ceiling, except the affect a credit reducation might have upon it.

By the way, if you want to see a country that tried to the "spending cut" route, Greece is a good example. It leads to a cycle of contractions within the economy - each cycle creating the need for further cuts.

Dose of Sanity: You do understand that the implication of Social Security as a percentage of income for the top one percent is measured in basis points do you not? To even inquire if SS is a part of the tax calculation for this cohort suggests you are unclear about where SS cuts off. It would be paid in full for any given year in the few days of income of the top one percent.

As to the AGI thing: There are two types of deductions: Above the line and below the line. Above the line apply to GROSS income and are used in calculating AGI (Adjusted gross income). Many ATL deductions are only available to the very rich. Thus, using the top 1% based on AGI is a very misleading number.

Yes - they were? Perhaps you should look at them again? Political Brinksmanship? That was a direct reference to the debt v. debt ceiling debate.

Um, no. See I already provided a note on this for you.(Note: “The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics,” S&P said in a statement late yesterday after markets closed. )

"... if you want to see a country that tried to the "spending cut" route, Greece is a good example."

Oh, it's a good example all right, but not of what you think.

Why did they have to cut spending, why not just keep spending more and more, and then double that? If that worked, who would be against it? Free lunches all around has to be very popular, and if it helps the economy, then let's party.

An example to look at would be Sweden, who when faced with the same thing in the 90's cut back drastically and now is sitting pretty.

Look at what has worked, not at some failure and then guess what they did wrong. Greece did everything wrong, and continues to. They are not cutting back, they are crashing.

As to the AGI thing: There are two types of deductions: Above the line and below the line. Above the line apply to GROSS income and are used in calculating AGI (Adjusted gross income). Many ATL deductions are only available to the very rich. Thus, using the top 1% based on AGI is a very misleading number.

Oh my God are you effing stupid.

It was based on AGI for all the categories becasue the CBO also looked at tax rates.

Dose of Sanity: You do understand that the implication of Social Security as a percentage of income for the top one percent is measured in basis points do you not? To even inquire if SS is a part of the tax calculation for this cohort suggests you are unclear about where SS cuts off. It would be paid in full for any given year in the few days of income of the top one percent.

Well, SS tax is a regressive tax - everyone above approximately 100k in income pays the same amount. (its got a cutoff) What I was bringing up SS tax for was a reference to a "1% pays x amount of revenue, 50% pays less than y". This probably ignores the proportionally higher amount paid by the lower bracket income PRECISELY because of the regressive nature of SS tax.

So that august second deal was the reduction in spending in exchange for raising the ceiling. The Brinkmanship that actually BROUGHT US OVER THE LINE was referenced in the reduction. You are also welcome to find me one economist who says otherwise.

Thread hijacked. Dose of Inanity does it again. Dose, you missed my original point, and now you'll make up all sorts of illogic to prove to yourself how you were right all along. I've been on this ride before and I know how it ends. Cue up the Hindenberg footage.

Eric said...They pay more taxes because they have grabbed more of the nations wealth.

"Grabbed"? That implies they took money to which they weren't entitled. Why do you say that?

================Because every wealthy Elite thinks that they are fully entitled to their wealth and power. That they EARNED it!!The French nobility.The JD Rockefellers and other robber barons that sweated and slaved to build their monopolies.The 300 Paraguayan Families who alone were responsible for what little wealth and prosperity Parguay had.The Soviet Elites of the Nomenkultura...entitled to all the wealth, dachas, power, and perks they had for out-competing others in the Communist hierarch.Bernie Madoff.The toy executive that shuts down 3 US factories and 600 workers but through his genius, doubles his annual wealth gains as the cheap China stuff comes in.

Dose of Sanity said... So that august second deal was the reduction in spending in exchange for raising the ceiling. The Brinkmanship that actually BROUGHT US OVER THE LINE was referenced in the reduction. You are also welcome to find me one economist who says otherwise.

Thread hijacked. Dose of Inanity does it again. Dose, you missed my original point, and now you'll make up all sorts of illogic to prove to yourself how you were right all along. I've been on this ride before and I know how it ends. Cue up the Hindenberg footage.

I'm sorry if I missed you original point - I seized on the debt ceiling comment because those misunderstandings annoy me.

I'm really sorry if you find me illogical - I try to be the opposite.

As for thread hijacks - I blame Jay.

p.s. +1 for dose of inanity. That's a great insult/pun, so I give you credit.

Hagar said...In the good old days of 1960, Jack Kennedy ran for president to the right of Richard Nixon on a platform of cutting taxes and strengthening our military defense.--------

In the good old days, Nixon said that fiscal responsibility meant we had to live within our means, have a balanced budget and positive balance of trade. And that meant JFK with his pandering ideas of tax cuts combined with big new deficit spending was wrong.Especially since no "missile gap" existed.Nixon warned that if we cut taxes but did not cut spending, or thought cool new military stuff and military adventures like Vietnam were not to be paid for by citizens.....America would slowly lose its prosperity, become a debtor nation.

Because every wealthy Elite thinks that they are fully entitled to their wealth and power. That they EARNED it!!

So... your answer is class envy?

It's not that they earned it, in the same way you and I earn money by doing a task someone is willing to pay for. Wealthy people make money through risk. And yeah, we all benefit when they risk their money, so I don't begrudge them the profit.

Let's remember that, when Ann asks, "How much of a President's work is done by just listening to the consensus among people who supposedly know something best? What's the alternative? Well, knowing stuff.", we're talking about someone with a graduate level Ivy League education who still qualifies as the most ignorant person to ever sit in the Oval Office.

Like Feldwebel Schultz, he knows NOTHING!

All he will do is pick yes-men like Turbo Tax Timmy Geithner and more Ivy League theoreticians whose ideas don't work.

average effective income tax rates have declined considerably for almost everyone, except the top 1 percent of earners. The decline is most pronounced for the bottom quintile (bottom 20 percent) of households, whose average tax rate went from zero in 1979 to a new record low of -9.3 percent in 2009. That means low-income households now receive more from the IRS in terms of refundable tax credits, such as the Earned Income Tax Credit, than they pay in taxes.

Dose of Sanity said... @ Jay - As for the credit rating reduction - look at the last year? I'd be shocked to find a source that would say that the threat of default, because of the debt ceiling debate, wasn't the cause of the reduction.

Then when the very words of the ratings agency doing the downgrading are provided, she is left with referring to an agency that didn't downgrade.

Also note: the downgrade took place after the President signed legislation increasing the debt ceiling.

As for the credit rating reduction - look at the last year? I'd be shocked to find a source that would say that the threat of default, because of the debt ceiling debate, wasn't the cause of the reduction.

S&P who downgraded after debt ceiling was raised asserts:

The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics

Then when the very words of the ratings agency doing the downgrading are provided, she is left with referring to an agency that didn't downgrade.

Also note: the downgrade took place after the President signed legislation increasing the debt ceiling.

Bravo, idiot.

The very words of the agency do reference the threat of default. That's what they are referring to as politcal brinksmanship. Please, please, please go back and read the source materials other than the out-of-context release. It will help.

Yes, they do. That's why I'm trying to get you to learn/remember the context.

All the agencies warned about a credit reduction. The debate in congress revovled around spending cuts being linked to debt ceiling increase. We risked a default when republicans refused to raise the debt limit. (those cuts are haunting us again via sequestiarion, but that's another story)

All of the news articles, all of the releases reference that. S&Ps reference to political brinksmanship is absolutely a reference to risking default.

It's not that they earned it, in the same way you and I earn money by doing a task someone is willing to pay for.

I agree with your point but will go a step further: If I leave a million (or a hundred or a thousand) dollars to my heirs, the money belongs to them even if they didn't earn it. Rich people have money. Their money. They might have earned it, they might have inherited it...but it is still their money.

People don't understand ownership anymore. Somehow, having a lot of money is a bad thing but wanting money that belongs to someone else is okay.

The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of defaault.

"We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process."

Don't read all of the ones after you see any posts from jay at me or me at him. He thinks I'm a total idiot so it usually devolves quickly. I also don't know when to backdown so its very "smash face against wall" conversation.

Just the first one I wrote I thought was on topic. It was actually a cool topic, so I'm sad to see it get derailed.

"Because it sounded like you just said it would be worse for our credit rating to increase our debt than to NOT PAY our debt."

Sorry to be slow responding. The debt ceiling has nothing to do with paying our debt. It means adding more debt. If we cut enough spending (yes, it's unrealistic) so the debt ceiling did not have to be raised, there would be no issue with repaying.

I hope you understand that as you seem to be posting lots of comments.

Bagoh20. Your questions to Cedarford are spot on. In many ways "buying American" has become something like solar energy or organic food: something for rich people to acquire and preen about. I make an effort to look at labels and I prefer, for example, to buy American made suits of high quality. I do so in an effort to keep a dying trade alive and I frankly know that in the end it is fruitless. Before long the skills to make fine clothes will be gone along with the need to wear them. Most American made goods are more expensive than their foreign counterparts. Worth it to me, perhaps, but not available to most.

That said, I do buy an incredibly cheap but American made blazer by a company called Anderson Little. To encourage him to keep it up.

This thread seems to have crashed and burned--I thought the issue in the initial post was the wisdom of raising taxes in a recession, a point supported by Mr Obama several years earlier. So--is that issue or not? This becomes very tedious.

Sorry to be slow responding. The debt ceiling has nothing to do with paying our debt. It means adding more debt. If we cut enough spending (yes, it's unrealistic) so the debt ceiling did not have to be raised, there would be no issue with repaying.

Haha, very true - sorry to run the thread out. As to your point - actually the debt CEILING does have to do with paying out debt, and it's fairly easy to explain.

We owe payments on the debt each year (as well as plenty of other obligations). We pay for these obligations via the budget, which at this point runs a deficit: Should we not raise the debt ceiling, we can't hae a deficit. This means we will not be able to pay all of our obligations and will result in a default to at least some of our creditors. (We could choose who to pay and who not to). It's not a matter of lowering the spending at the time the debt ceiling stops - we have already made those obligations to pay.

This was a big concern during the debt ceiling debate. Does that make sense?

Most of you fail the quiz! The Professor's question was about the experts not the policy!

The "experts" jumped ship after sighting the first leak! Rohmer, Summers and Goolsbee fled the scene of the stimulus crime. We were told that these brilliant economist had been called to D.C. to save the Republic. We are now mocking their efforts and predictions.

Dr. Steven Chu is another great example of an "expert" who would supposedly tranforms American energy policy! I think his most laughable suggestion was to paint all the rooftops white, in order to reflect sunlight!

Blameless Barry constantly cites the consensus of (nameless)"experts" that all agree with his agenda.

RogerJ i think even the lefties know it is a bad idea bordering on horrible. But their base is so ignorant of economics and so suseptible to envy and hatred of those who have done well that it is politically irrestible to keep up the threat. They no longer bother to defend it as you can see from this thread.

This thread seems to have crashed and burned--I thought the issue in the initial post was the wisdom of raising taxes in a recession, a point supported by Mr Obama several years earlier. So--is that issue or not? This becomes very tedious.

That's the idea - dissemble, deflect, distract. Get people talking about anything else and wear them out so they just walk away.

But Michael K's right. The Lefties are playing to the gallery, although I've heard people like Patty Murray and Senator Ma'am have lost arguments with bricks.

Well, Obama has a problem because (1) Obama really wants to raise taxes and (2) under Obama, the economy will always be a "down economy", because everything he does, says and thinks is anti-growth and ant-free market. Not necessarily anti-all-business, because he does take care of his buds like Warren and Jeffrey. Of course, GE is probably among the top 5 outsourcers ever, and Berkshire doesn't actually create jobs, they just invest money for Warren and others (which is perfectly cool, but being a great stock-picker doesn't make you a guru in all fields of business).

bagoh20 said...Cedarford, When you purchase a good or service, do you:

look for the one that cost the most? buy from the company that pays it's people the most?tip every low paid worker who's toil you benefit from?only buy union, or American, regardless of the price?

=======================When I buy things, I go with the best price for the best quality...because that is how Americans have been conditioned to shop...along with marketers many influences to buy on brand, perceived "hotness", getting the stuff will lead to more success and sex, etc.But that does not mean the idiot notion of the consumer market being wise and deciding if it is best we destroy all our local industries for China stuff is sustainable.

We recognize that in laws that "impede customers sacred Freedom!" in many ways.I could get a hell of a deal on a stolen Rolex or Honda Accord...but the law says that would be bad for society overall and shuts down my cherished freedom to get stolen goods bargains.We decide that consumers do not know best when opium floods into China or consumers want the best methadrine or crack at a good price.We decided for most of our history that in developing jobs and industries - we needed to be able to plan for and invest in that growth without it being destroyed by foreign colonial empire's cheap labor pools or by sudden technical advances that could destroy millions of jobs - Germany and steel...We put tariffs up.When we did let foreign firms push their goods in, we normally isisted that they were not going to push finished goods in - but semifinished goods at best and always with a deal they would help build the factories and share their technology with America in return for profits.

the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements

and feel their view of:the people who are expecting to get paid get nervous. That's what resulted in a credit rating reduction for us last time.

"It's not a matter of lowering the spending at the time the debt ceiling stops - we have already made those obligations to pay.

This was a big concern during the debt ceiling debate. Does that make sense?"

Only if you are ignorant of economics and national debt. You cut spending enough to pay the obligations without borrowing. Then you don't have to raise the debt ceiling. At least, those of us who understand this know that a requirement to cut spending in a series of compromises that include raising the ceiling will improve our credit rating.

The ignorant and the Democrats (sorry to be redundant) don't seem to appreciate this. The psychological effect of such sensible policies would do much to get the economy going again. That would increase GDP and set off a virtuous cycle.

As to whether SS (and Medicare, and etc. pulled out of ones paycheck or "contributions" paid by employers) is a tax -

- By the letter of the law, no. But this is a fairly narrow point that may matter to individuals (in terms of calculating or legally securing future SS benefits, etc.) but its economically not very relevant.

- As John Roberts has shown, things not called a tax can be constitutionally construed as taxes. Also a limited point.

- Practically, for macroeconomic analysis, as opposed to legal analysis, anything that goes in to the government black box is a tax (in the case of the US government; some governments that collect significant funding by sovereign investments, state enterprises and sales of mineral rights, etc. are special cases). Within the black box, what the government does in issuing promissory notes to itself is an irrelevant mechanism. The CBO, etc. calculates deficits by including SS payments offsetting current spending. Thats the only reasonable way to treat SS.

- From the point of view of class warfare arguments, SS and etc. should certainly be included in tax burden calculations. SS benefits are only imperfectly determined by whats paid in. SS is effectively unearned welfare for many, and a lousy investment for many. Easiest just to think of it all as just an additional category of spending according to government whim.

Get past the point: The credit rating was lowered because the debt is too high and we were not dealing with it, including cutting spending AND raising the ceiling.

But, the ceiling is irrelevant if your debt is under control. Raising it doesn't fix anything, but it does prevent immediate credit issues, in other words it kicks the can, which satisfies some with very narrow concerns, namely credit rating agencies.

If the government forces you to pay something and will throw you in jail if you don't, either it's a tax or it's a fine. Social Security is a tax except in the narrowest legal sense in which Congress has redefined common words in order to avoid calling it what it is.

"There's a mainstream consensus and we're only arguing about the degree of progressivity, pretending we're farther apart than we are."

Yes, and the Republicans are missing the opportunity to take the issue away from the Democrats by offering a compromise on rates.

Instead of the full 4.6% increase over 250k they could (for example) propose a 2% increase at 500K or 1 million.

That would seriously weaken Obama's tax the rich argument (which resonates with many voters) without doing any significant harm to the economy or the wealthy.

The current leadership of the Republican party is a weakness that threatens the future of the country. If they can't play politics well enough to win the presidency this year, they deserve the name "The Stupid Party."

So, this is an interesting question: If we know spending generates jobs, and cuts lead to job loss, how to we justify our tax and spending proposals?

Ok, great, start with a false assumption, and go from there, and ignore that an additional $5 trillion or so of spending and 5% of GDP since the 2008 elections have cranked unemployment levels up to levels we haven't seen for this long since the Great Depression.

No, government spending does not create jobs, and no, it doesn't create wealth. It destroys jobs and redistributes wealth, and by doing so, reduces the size of the pie being divided up.

It has never been the case, and any justification that was used during the Great Depression to do so (which arguably greatly lengthened and deepened the Depression) was predicated, at least, in part, on building infrastructure. Now, infrastructure construction takes on average six years, which is, in terms of fiscal stimulation to the economy, most often counter-cyclical. So, if you hear someone talk about shovel-ready infrastructure projects, either laugh at them, or know them to be fools.

So, after clearing that up, where were we?

""If it was a bad idea to raise taxes... in a down economy then, why is it a good idea to raise taxes in a down economy now?""

Because, of course, it is still a horrible idea. The Dems want to do it now, because they know that next year, they won't have a chance, and probably won't have a chance again to increase the size of government by much for the next generation or two.

You can find plenty of economists who say just that - the problem is, of course, that the Obama Administration isn't listening to any of them. They are just listening to the economists who can come up with reasons to increase taxes and the size of government.

If the government forces you to pay something and will throw you in jail if you don't, either it's a tax or it's a fine. Social Security is a tax except in the narrowest legal sense in which Congress has redefined common words in order to avoid calling it what it is.

Thank you, Eric, for being so clear and concise.

If it weren't a tax our SS payments would go directly to the mythical SS trust fund instead of the treasury.Byr,bye, all the money you paid in.

There are fine quality American made clothes. I buy them. It's called having an American citizen tailor make me a handmade suit.True the wools are either English or Italian but the the tailor made them and for the same or less than buying a comparable suit of the rack. Same for the dress shirts.

The problem with American's bemoaning loss of US made articles is that one never sees what the US exports.

The US is the world's third largest exporter, we could export even more if we actually had an intelligent congress, administration and state governments and removed unnecessary impediments to manufacturing in this country.

Dose, you seem nice enough but rather uniformed. Social security is not an income tax, it's an excise tax on income that is tasked for one thing only, your retirement. It's a government annuity (albeit run as a Ponzi scheme and with no property rights). That's why you get your annual statement of benefits at age X based on your contributions. So to say the poor pay an out sized contribution because it encompasses their entire income is a falsity, they are prepaying their retirement and nothing more.

Credit ratings: a rating is simply the estimate of credit worthiness, in other words the ability to repay debt. Raising the debt ceiling doesn't fundamentally change the underlying factors that correlate in to the ratings. Investors, even the less than superbly educated and sophisticated ones are quit capable of seeing and understanding a trend line.You have noticed that long term bonds aren't selling all that well. That is all you need to know. Otherwise the government could do the mother of all re-fi's and roll over the debt in to 50 or more year bonds at these low rates. I haven't seen a big market for those tenured bonds, have you? When you do, then the trend lines will be positive. Eventually the market will be even harder to please demanding shorter terms due to the expectation of at some point going into default.The only thing saving the treasury today is the EU is so messed up we look less bad in comparison and countries with solid economies and economic management are discouraging foreigners from shifting funds to them less it creates too high an exchange rate against reserve currencies.

As for your comments on AGI/ATL, you have zip idea what you are talking about. Because if you are right then I am wasting a lot of money on fancy NYC accountants. Although on the Internet nobody knows you're a dog, for what its worth my quarterly payments exceeds most people's annual income and as long as I earn ordinary income there ain't no magic deductions or special exceptions. The trick is to be able to retain enough earnings to eventually be able to shift one's income to capital gains, dividends and and muni tax exempts.

As for 'fairness' in renumeration and taxing, the business owner and or investors takes the risk, not the employee. The employee is no more risking his or her capital than any other vendor that provides a service, but unlike other creditors in the event of non-payment has better legal protection. As long as the employer fulfilled their contractual obligation they owe the employee nothing more. As long as the employee gets paid, they risked nothing. This was better stated by a previous comenter.

Bage C4 is a Klansman without the robe. Same racial and economic views.

The problem with Obama's experts is that they are not expert and running an economy nor fixing a troubled one. WHat they are expert at is demagoging business and enacting left wing economic policies that stifle economic growth.

Obama's experts are guys like Geitner who can't even use Turbo tax to file his own taxes and the 30or so other members of his staff who owe close to a million in taxes (each). We are getting the exact economic outcome you'd expect with experts like this.

also, the reason he is now falling back on his tried and true, "the rich are evil" talking points, is that's all he has. Yes, the statement he made in 2010 makes logical sense, but he's running against a businessman arguing to keep taxes low to stimuatle the economy. Considering the mess he finds himself in, the only thing he can argue is black is white, up is down, right is wrong. ie Doublespeak.

The original 'Robber Barons' were European knights who had earned or been given Baron status during the crusades. When they returned to Europe, having no skills except violence, they set up trade barriers across their territories and extorted tolls from commercial traffic. They did not create any value of their own. They are the opposite of the captains of industry of the 19th century. Calling those people 'Robber Barons' is one of the great injustices of history.

Cedarford to refine your answer: no you don't do any different than the CEO's you are criticizing. Just like them, you buy based on value, and you don't value American jobs enough to pay extra for everything you buy. That really gives them no choice. You have a choice, you will just have less money. They will go out of business, and the result will be the same, because you can't control the global market. Play or don't, but don't complain about the ones playing by the only rules that are real.

I run a successful U.S. manufacturing business dedicated to buying, building and selling American as much as possible, but I don't pretend that everyone can do that.

Like you, Americans and everyone else wants value, and for most that means the lowest price. Those are the rules, no matter what you would prefer they be. Don't blame the CEO's - they either know that the customer is always right, or they quit. Business is not a political hobby.

You know, Jay, you may be the smartest person in the world for all I know, and everything you say true. But your shit-hole, arrogant attitude causes me to conclude that 'anything' you espouse is something I would fight against.

Just because you are such an ass. You would have no hope of me following you into combat, other than with a pistol held to my head. Even at that, at some point that threat would fail.

Speaking of consensus, and going back to my second post of the day about how much we Americans really do agree with each other, nearly all of us say taxation should be progressive. The only issue is the steepness of the progressivity.

Then I'm a radical. Because I believe that the federal budget should be paid for, equally (in terms of absolute dollars) by each able-bodied adult.

You want everyone to pay their fair share? Well, the lower 50% who pay only 3% of all tax dollars today would pay their fair share of 50%.

Just because someone is able to pay more should not obligate them to pay more than anyone else.